It’s sunny in the state of digital video advertising

“Skip Ad.” That short clickable text was what once defined digital video ads.

In the landscape ad agencies now work in, digital video ads are no longer so irrelevant that all consumers just skip them. According to Q4 2014 research by Integral Ad Science, the percentage of U.S. online video ads that were in-view that quarter reached 39.0 percent, a 9-percentage-point quarter-over-quarter increase.

Recent figures break down the surge: online video is now the fastest-growing ad category, growing 34 percent last year to nearly $11 billion. And it’s expected to grow an average of 29 percent a year through 2017, when it would top $23 billion.

We identify some of the key trends shaking up the industry.

Programmatic Ads Driving Changes

Improved delivery technology has upended advertising. Programmatic ads, which refer to the automatic process of how time is bought to reach specific audiences, now offers opportunities to improve the targeting of video ads. A subset of programmatic is real-time bidding, the ability to block inappropriate ad channels for specific audiences, and better analytics reporting -especially on mobile devices – mean that digital video ads are increasingly finding the right audience.

“We’re seeing advertisers move from a pure video and completed view rate perspective to actively understanding what actions users are taking while watching the video. This moves the conversation from how many people are watching my video to the much more critical phase of what are my viewers doing while watching to move down the sales funnel,” says Jonathan Stefansky, CEO/C0-Founder of Viewbix. “By capturing this engagement data in real-time, it gives advertisers the ability to dynamically change the video ads based upon what actions users are taking which significantly improves campaign performance.”

Traditionally, ads were being misdirected most of the time. The ad delivery platform LiveRail quotes Nielsen OCR data that found the digital industry is only about 60 percent accurate in its demographic targeting. LiveRail says that means about 4 in 10 users aren’t seeing appropriate ads.

According to a recent report by eMarketer the global mobile advertising market will surpass $100 billion in spending and account for more than 50 percent of all digital ad expenditure in 2016. Of that figure, US spending on programmatic ads for mobile devices is expected to account for $14.88 billion, or 55.0 percent of all digital display ad spending in 2015, says one eMarketer estimate. In Canada, spending on programmatic ads in 2014 only reached about 15%, but is expected to double this year, said estimates in another report from the company.

New Mobile Channels

Last year saw channels open up to video ads on apps geared toward younger audiences, such as Instagram and Snapchat. Automated targeting technology is not the only reason campaigns have been successfully launched there. Each platform’s careful review of all static and video content has also made a difference. Last year Instagram CEO Kevin Systrom’s personal involvement in vetting ads attracted special attention.

Last autumn, Activision started sharing a 15-second clip from a longer live-action video on its Facebook page and on Instagram. The fact that mobile access to the Internet is the norm for a growing majority of usage time did not go unnoticed.

“Our audience is becoming increasingly mobile-centric, and Instagram is a mobile-centric platform,” Jonathan Anastas, head of digital and social media at Activision told AdWeek last October. “So it’s an important part of the marketing mix.”

The mobile share of the “marketing mix” is only going to grow.

“Next year there will be more than 2 billion smartphone users worldwide, over one-quarter of whom will live in China alone,” say the eMarketer projections. “Especially there and in other emerging and developing markets, many consumers are accessing the internet mobile-first and mobile-only, so leading advertisers allocate their digital expenditure to mobile accordingly.”

And with mobile Facebook adoption continuing to soar, this new study by Mixpo is especially noteworthy: Of 125 agencies, brands and publishers surveyed, 87 percent plan to run video ad campaigns on Facebook. In comparison, fewer (81.5 percent) plan to do so on YouTube

Interactive Content Changes

Content in digital video ads has changed too, something we’ve seen across all platforms. Overlay video technology places an interactive layer of clickable options overtop of a streaming video. The process allows customers to interact directly from the video playing on the screen.

“We’re excited about the ability to add meaningful calls to actions (CTAs) directly into video content, which allows viewers to take action within the video experience results in extremely high engagement rates, as high as over 20 percent,” says Stefansky. “Standards for both desktop and mobile — both browser and app based via VPAID/2 and MRAID — allow technology providers the ability to quickly distribute these interactive ads across all platforms and optimize performance based on device and distribution networks.”

Kate Baggott

Kate Baggott is the Managing Editor of B2BNN. Her technology and business journalism has appeared in the Technology Review, the Globe and Mail, Canada Computes, the Vancouver Sun and the Bay Street Bull. She is the author of the short story collections Love from Planet Wine Cooler and Dry Stories. Links to recently published pieces can be found at www.katebaggott.com